SUMMARY APPRAISAL REPORT

Transcription

1 SUMMARY APPRAISAL REPORT 3 VACANT RESIDENTIAL LOTS WITHIN BROOKHOLLOW SUBDIVISION LOCATED ALONG WEST TEN MILE ROAD IN CANTONMENT, ESCAMBIA COUNTY, FLORIDA AS OF APRIL 28, 2011 B&A File: VR11DS PREPARED FOR BOARD OF COUNTY COMMISSIONERS ESCAMBIA COUNTY FLORIDA 213 PALAFOX PLACE, 2ND FLOOR PENSACOLA, FLORIDA BY REAL ESTATE APPRAISAL CORPORATION 100 NORTH SPRING STREET POST OFFICE PENSACOLA, FLORIDA PHONE: (850) FAX: (850) shawnbrantley@brantleyassociates.com R. SHAWN BRANTLEY, MAI Individual Member

2 REAL ESTATE APPRAISAL CORPORATION R. SHAWN BRANTLEY, MAI, CCIM FL: STATE-CERTIFIED GENERAL APPRAISER RZ289 AL: CERTIFIED GENERAL REAL PROPERTY APPRAISER, G00419 B ARB ARA M. MARTIN, MAI STATE-CERTIFIED GENERAL APPRAISER RZ2552 BARBARA S. BRANTLEY, CPA ADMINISTRATION & FINANCE BRUCE A. BLACK STATE-CERTIFIED GENERAL APPRAISER RZ2714 May 3, 2011 Larry Goodwin Board of County Commissioners Escambia County Florida 213 Palafox Place, 2nd Floor Pensacola, Florida Re: Summary Appraisal Report of 3 Vacant Residential Lots within Brookhollow residential subdivision in Cantonment, Escambia County, Florida. B&A File: VR11DS Dear Mr. Goodwin: Per your request, we have inspected the above referenced property and have investigated the market for pertinent data for the purpose of obtaining an opinion of the market value of the subject property as of a current date. Our valuation of the subject property consists of three vacant residential lots within the Brookhollow subdivision, which is located in Cantonment, Escambia County, Florida. The property rights appraised are the fee simple estate. Based on our investigation and our analysis of the information gathered, our opinion of the market value of the subject property, as of April 28, 2011, is: FINAL VALUE OPINION SEVENTY-FIVE THOUSAND DOLLARS $75,000 The above value opinion is subject to the limiting conditions and general assumptions contained in this appraisal. The appraisal has been made in compliance with the Uniform Standards of Professional Appraisal Practice (USPAP) and with the Code of Professional Ethics of the Appraisal Institute. This appraisal assignment was not made, nor was the appraisal rendered on the basis of a requested minimum valuation, specific valuation, or an amount, which would result in the approval of a loan. R. SHAWN BRANTLEY, MAI 100 NORTH SPRING STREET POST OFFICE BOX PENSACOLA, FLORIDA PHONE (850) FAX (850) shawnbrantley@brantleyassociates.com

3 Mr. Larry Goodwin May 3, 2011 This is a Summary Appraisal Report, which is intended to comply with the reporting requirements set forth under the Uniform Standards of Professional Appraisal Practice for a Complete Summary Appraisal Report. As such, it presents only summary discussions of the data, reasoning, and analyses that were used in the appraisal process to develop the appraiser's opinion of value. Supporting documentation concerning the data, reasoning, and analyses is retained in the appraiser's file. The depth of discussion contained in this report is specific to the needs of the client and for the intended use stated herein. The appraiser is not responsible for unauthorized use of this report. We appreciate the opportunity of doing this work for you, and if there should be any questions, please do not hesitate to call. Sincerely, R. Shawn Brantley, MAI, CCIM State-Certified General Appraiser Florida # RZ289 David C. Singleton Registered Trainee Appraiser Florida # RI23431

4 TABLE OF CONTENTS TITLE PAGE... LETTER OF TRANSMITTAL... TABLE OF CONTENTS... 4 SUMMARY OF SALIENT FACTS AND CONCLUSIONS... 5 LOCATION MAPS, EXHIBITS AND PHOTOGRAPHS... 6 LEGAL DESCRIPTION FUNCTION AND INTENDED USER OF APPRAISAL SCOPE AND EXTENT OF DATA COLLECTION AND ANALYSIS DEFINITION OF MARKET VALUE EXPOSURE TIME MARKETING PERIOD PROPERTY RIGHTS TO BE APPRAISED ZONING, FUTURE LAND USE, CONCURRENCY ASSESSMENT AND TAXES HISTORY OF PROPERTY GENERAL AREA DATA NEIGHBORHOOD DATA PROPERTY DESCRIPTION HIGHEST AND BEST USE APPROACHES TO VALUE SALES COMPARISON APPROACH FINAL VALUE OPINION ASSUMPTIONS AND LIMITING CONDITIONS CERTIFICATION QUALIFICATIONS OF APPRAISER ADDENDA GENERAL AREA DATA SUBJECT PROPERTY DATA PLAT ZONING DEED

5 SUMMARY OF SALIENT FACTS AND CONCLUSIONS PROPERTY IDENTIFICATION: LOCATION OF PROPERTY: OWNERSHIP: PURPOSE OF APPRAISAL: PROPERTY RIGHTS APPRAISED: 3 Vacant Residential Lots within Brookhollow subdivision in Cantonment, Florida. The subject s 3 lots are located within the Brookhollow residential subdivision, along the north side of West Ten Mile Road in Cantonment, Escambia County, Florida. Parker Custom Built Homes Inc Stallion Road Cantonment, Florida To obtain an opinion of the market value of the subject property as of a current date. Fee Simple LAST DATE OF INSPECTION: April 28, 2011 DATE OF VALUATION: April 28, 2011 DATE OF REPORT: May 3, 2011 ZONING: FUTURE LAND USE: LAND AREA: IMPROVEMENTS: HIGHEST AND BEST USE: V-3, Villages Single Family Residential High Density (County Zoning) MU-S, Mixed Use 3 Lots, each 0.35 Acre None Residential Development VALUATIONS: FINAL VALUE OPINION: $75,000 5

6 LOCATION MAPS 6

7 COUNTY AERIAL ASSESSMENT MAP PLAT MAP OF SUBJECT SUBDIVISION 7

8 SOIL SURVEY SUBJECT (Location of subject property is only an estimate) Symbol Soil Slope % Drainage Soil Material & Characteristics 26 Poarch sandy loam 5-8 Well-drained 54 Troup-Poarch complex 8-12 Somewhat excessive This very deep, well-drained soil is on moderately sloping side slopes of ridges in the central and northern parts of the county. Moderate water capacity; moderately slow permeability; does not flood. Suited for cultivated crops, pasture use, growth of hay, slash, loblolly, and longleaf pines, and most urban and recreational uses. Located on strongly sloping hillsides in Central and Northern Escambia County. The soil is found on shoulder slopes and upper side slopes. Has moderate water capacity, moderately slow water permeability and does not flood. Not suitable for cultivated crops, urban or recreational uses due to sandy texture and poor septic ability during wet periods. Suited to pasture use, growth of hay, and slash, loblolly and longleaf pines. 8

9 FLOOD MAP According to the above FEMA Flood Map, the subject is within flood zone X, which is an area of minimal flood probability 9

10 PHOTOGRAPHS OF SUBJECT PROPERTY Lot 3, northern view, 04/28/2011 Lots 2, 3 and 4, northeastern view, 04/28/

11 PHOTOGRAPHS OF SUBJECT PROPERTY West Ten Mile Road, subject lots on right, western view, 04/28/2011 West Ten Mile Road, subject lots on left, eastern view, 04/28/

12 LEGAL DESCRIPTION A copy of the Brookhollow subdivision is recorded within the public records of Escambia County at Plat Book 10, Page 1. The subject lots to be appraised are the following lots as indicated within the Plat Map of Brookhollow: Lots 2, 3 and 4, Block B (total of 3 lots). A copy of the subdivision plat is included within the exhibits section presented earlier in this report. The legal description is also found in the Warranty Deed of the most recent transfer of the subject property. This deed is recorded in OR Book 5818, Page 87 in the Escambia County Florida public records and is included in the addenda of this report for the reader s review. FUNCTION AND INTENDED USER OF APPRAISAL It is our understanding this appraisal will be used for assisting the client, the Escambia County Florida Board of Commissioners, in determining the market value of the subject property for a possible purchase transaction. SCOPE AND EXTENT OF DATA COLLECTION AND ANALYSIS The scope of the appraisal encompasses the necessary research and analysis to prepare a report in accordance with the intended use. Primary data concerning region, neighborhood and the property was obtained through discussions with city and county government officials, Escambia County Property Appraiser, Escambia Planning and Zoning Department, Escambia County Public Records, Escambia County Tax Collector, GIS and aerial maps and local utility companies. Secondary data was obtained from the Chamber of Commerce, Realtor Publications and Metro Market Trends (a local data 12

13 base company). For this appraisal assignment, the subject property was identified to the best of our ability utilizing available information from the plat maps recorded at Plat Book 10, Page 1 in the public records of Escambia County. This firm has completed numerous appraisal assignments in the subject neighborhood and we have compiled considerable data for it. Much of the data incorporated in this appraisal analysis has come from our files and was updated / expanded as necessary in performing our appraisal analysis. The nature of the market data collected has been determined based upon a thorough inspection of the subject property and resulting highest and best use analysis. For this summary appraisal report, data collected during inspection of the subject property includes extensive observation and photographing. Within the confines of this analysis, the appraiser has made an examination of all available and pertinent market data that could be located within a minimum time frame of at least six months before the effective date of the appraisal. However, this search has been extended substantially in many areas, in order to obtain a sufficient quantity of market data. The search was limited to Escambia County, with the most emphasis placed on those areas most proximate or similar to the subject. Also, the selection of the data reported is limited to that data which the appraiser considers relevant to the assignment and to the purpose of the appraisal, under the terms of the highest and best use conclusions rendered herein. Research of comparables included residential lots within Escambia County in accordance with the highest and best use. The time period of our search included the present date back to January Data sources employed include discussions with city and county government officials, Escambia County Property Appraiser, Escambia County and City of Pensacola Planning and Zoning Departments, Escambia County 13

14 Public Records, Escambia County Tax Collector, GIS and aerial maps, Realtor Publications, Metro Market Trends, Multiple Listing Service, and local utility companies. After considering our analysis of the data and utilizing the sales comparison a final opinion of the market value of the 3 subject lots was made. The report is prepared in compliance with the Uniform Standards of Professional Appraisal Practice. The format used is a summary appraisal report. 14

15 DEFINITION OF MARKET VALUE "The most probable price which a property should bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller each acting prudently and knowledgeably, and assuming the price is not affected by undue stimulus. Implicit in this definition is the consummation of a sale as of a specified date and the passing of title from seller to buyer under conditions whereby: 1) buyer and seller are typically motivated; 2) both parties are well informed or well advised and each acting in what they consider their own best interests; 3) a reasonable time is allowed for exposure in the open market; 4) payment is made in terms of cash in U.S. dollars or in terms of financial arrangements comparable thereto; and 5) the price represents the normal consideration for the property sold unaffected by special or creative financing or sales concessions granted by anyone associated with the sale." 1 EXPOSURE TIME The above definition assumes a reasonable exposure time during which the subject would have been offered on the market prior to the hypothetical consummation of a sale, at market value, on the effective date of the appraisal. Based upon a retrospective estimate, the appraiser has concluded an exposure time of from six to twelve months. 1 Uniform Standards of Professional Appraisal Practice as promulgated by the Appraisal Standards Board of the Appraisal Foundation (1/1/08-12/31/09). 15

16 MARKETING PERIOD The reasonable marketing time is an estimate of the length of time it might take to sell the subject property at the above estimated market value level during the period immediately after the effective date of the appraisal. This marketing time has been estimated at six to twelve months for the subject property, based upon presently available market information. PROPERTY RIGHTS TO BE APPRAISED All present and future benefits and rights of the property in fee simple unencumbered title, free and clear of all leases, mortgage indebtedness, other liens or special assessments against the property. ZONING, LAND USE PLAN, AND CONCURRENCY The subject property is subject to Escambia County jurisdiction and is within the V-3, Villages Single Family Residential High Density district. According to the Escambia County Land Development Code, the purpose of the V-3 district is: Single-family detached residential district characterized by urban land development patterns with residential subdivision densities varying from one unit per acre to five units per acre. Mobile homes are not allowed. No minimum lot size is required for new subdivisions, but development must meet overall maximum density requirements. V-2A may be used in any AIPD overlay area with a compatible future land use designation. Density will be determined by the accident potential zone density allowed for their property, not to exceed three d.u./acre. A complete summation of allowable uses and pertinent development guidelines for the V-3 zoning district is included within the addenda of this report. Highlights are as follows: 16

17 Permitted Uses: 1. Single-family detached dwellings and their customary accessory structures. 2. Private marina. 3. Family day care homes and family foster homes. 4. Golf courses. 5. Country clubs and their customary accessory uses. 6. Places of worship. CURRENT ZONING MAP Future Land Use - The subject property is located within the MU-S future land use designation. This designation is consistent with the previously stated zoning classification. 17

18 FUTURE ZONING MAP Concurrency - Development orders or permits require a Certificate of Concurrency with approval contingent upon a finding that adequate public facilities (e.g., roadways, water/sewer, parks, drainage, and waste) will be available concurrent with the impact of the proposed development. We are not aware of any concurrency issues associated with this location. In summary, the subject property contains a total of 3 vacant residential lots within the Brookhollow residential subdivision. The plat map for the subject property is recorded at Plat Book 10, Page 1 of the Public Records of Escambia County. Restrictions: No deed restrictions or subdivision covenants for Brookhollow subdivision could be found in the public records of Escambia County Florida. 18

19 ASSESSMENT AND TAXES Each of the subject s 3 lots is assessed to Parker Custom Built Homes Inc., whose mailing address is listed as 2711 Stallion Road in Cantonment, Florida Below, we present the most recent year 2010 assessment and tax data for the subject s lots. SUMMARY OF YEAR 2010 ASSESSMENTS AN D TAXES FOR THE SU BJEC T'S 3 LOTS PARCEL NUMBER ASSESSMENT LAND IMPRO VEMENTS TAXES 211N $23,750 $23,750 None $ N $23,750 $23,750 None $ N $23,750 $23,750 None $ TOTALS $71,250 $71,250 NONE $1, The 2010 assessment for the subject lots is $23,750/lot or $71,250 total. The 2010 tax liability for each lot is $ or a total of $1, Compared to similar properties, the assessment and tax liability appears reasonable. HISTORY OF PROPERTY The subject s three lots have been under the current ownership since 2006 per public records. A warranty deed recorded in OR Book 5818, Page 87 indicates that Parker Custom Homes Inc. (grantee) purchased the three subject lots on January 10, 2006 for $99,000 ($33,000/lot) from Derrick Sammons and Todd Winans (grantors). This transaction occurred some five years ago near the height of the market, thus, we do not give it consideration in this analysis. This deed is included in the addenda of this report for the reader s review. The date of the development of the subdivision is unknown; however, the date on the subdivision plat map is August

20 Each of the three subject lots were previously listed in the local MLS (#372306, , ) as vacant lots on July 2, 2009 at an asking price of $39,900. These listings expired on December 10, 2009 at the same price. Prior to this, each of the subject lots were listed on November 14, 2005 (291142, , ) for $35,000 each, and subsequently was withdrawn from the market at the same price on December 5, We also found the subject lots listed in MLS as part of a pre-construction home package. These packages were listed several times between 2007 and 2009 as dwellings ranging from 1,230 SF to 1,552 SF and ranging in price from $154,900 to $169,900. We are not aware of any other listings or pending sales involving the subject lots. Furthermore, we are not aware of any other closed sales, pending sales or active listings involving the subject property within the past five years. GENERAL AREA DATA A detailed description and analysis of the broad market area is included in the addenda. Based on our analysis, we are of the opinion that the demand for real estate should remain generally consistent in the broad market area. 20

21 NEIGHBORHOOD DATA The subject is located in the community of Cantonment, which is located in central Escambia County, Florida, approximately 15 miles north of the City of Pensacola. The neighborhood boundaries are identified as the Escambia River to the east, Quintette Road to the north, the Perdido River to the west and Interstate 10 to the south. The general area is comprised of mostly low to medium density residential usage with supportive commercial development along busier roadways, mainly Highway 29 and Nine Mile Road (Highway 90). Over the years, this area as a whole has experienced a significant amount of growth in the form of residential development, supportive commercial (shopping centers, free-standing retail), and other uses (schools, other governmental), as expansion outward from the city of Pensacola. The area also benefited from the many jobs provided by International Paper. Generally, as one progresses northward, residential densities decrease. The main north-south roadway through the subject neighborhood is U.S. Highway 29. This roadway has a 300 right-of-way and varies from four to six lanes. Located along U.S. Highway 29 within the general vicinity of the subject are several churches, banks, mobile homes dealerships, medical clinics, convenience stations, a Winn Dixie supermarket, a Wal-mart, and numerous fast-food restaurants and small commercial establishments. Many local businesses directly or indirectly function from the operations of the International Paper plant, which provides substantial employment opportunities to local residents. The location of the subject property is considered suburban. Many of the residences are commuters employed in the nearby population center of Pensacola. A considerable amount of the commerce in the area to the north is agricultural and forestry related. 21

22 There have been some new residential developments in the Cantonment area as the demand for housing expands north and west of the Pensacola area. Housing options in the subject s neighborhood consist of mobile homes, single-family residences and a few apartment complexes scattered along Highway 29. The age of the aforementioned housing options range from new to sixty years. Prices for housing in the neighborhood generally range from $40,000 to $350,000. Newer subdivisions within the subject neighborhood include Cardinal Creek, a 42-lot subdivision located ±2 miles north of the subject on the west side of Highway 29. This development was completed in late 2008, with lots being taken down by Adam s Homes. In the past year, the subdivision has had four improved sales ranging from $129,900 to $151,850. Currently, there are five listings of new construction homes ranging from $127,020 to $157,900. Per the County Appraiser, there are currently 19 vacant lots (45% vacancy). Located ±2.5 miles northwest of the subject and in very close proximity to Cardinal Creek is Grande Oaks Farm, a 133-lot subdivision on the west side of Tate Road. This subdivision was recorded in 1990; however, a recent addition containing 64 lots was recorded in In the past year, there have been three improved sales in this subdivision ranging from $200,000 for a 2,312 SF home to $360,000 for a 3,286 SF home. Currently, there is only one listing for $299,900. There are 56 vacant lots in this subdivision (42% vacancy). Bentley Oaks is a 199-lot subdivision developed by the Mitchell Company located ±3.5 miles northwest of the subject on the north side of East Kingsfield Road. The first phase was recorded in 2005 and includes 117 lots, while the second phase of this development was recorded in 2007 and includes 82 lots. In the past year, the subdivision has had 13 improved sales ranging from $105,000 to $169,900. There are 22

23 currently 7 active listings, ranging from $129,900 to $239,000. There are 48 vacant lots in this subdivision (24% vacancy). Jaxson Estates, located ±4 miles northwest of the subject on the west side of Louis Street, is a 90-lot residential subdivision recorded in In the past year there has been only one sale in this development, which a newly constructed house for $115,000. There are currently no homes listed for sale in this subdivision. Presently, there are 84 vacant lots (93% vacancy). Twin Pines is located ±5 miles northwest of the subject property on the south side of Muscogee Road. This development was completed in two phases between 2004 and This subdivision contains 59 lots being developed by Adam s Homes. In the past year, the development has had three improved sales from $124,900 to $153,000. There are currently two homes listed for sale in the development, one for $129,900 and the other for $181,400. Presently, the County Appraiser indicates that 30 of these lots are vacant (51% vacant). The following map shows the locations of these newer developments in relation to the subject property. 23

24 But the residential market remains over-supplied, as evidenced by the abundance of listings for single-family residences and lots. We observe minimal sales activity, but prices appear to have stabilized somewhat during over the past year. Of addition concern are the high levels of foreclosures occurring, which are not expected to peak until next year, and these foreclosures will continue to supplement the supply to an already over supplied market. According to information gathered from Metro Market Trends, a total of 422 (35.2/month) single-family homes sold from $100,000 to $300,000 in the year 2006 in Cantonment. In 2007 the number of single-family home sales in the same price range dropped to 315 (26.3/month), indicated a 25.4% decline. In 2008, single-family home sales in this range further declined to 295 (24.6/month), indicating additional decline of 6.3%. In 2009, 283 (23.6/month) single family homes were sold, indicating further decline by 4.1%. In 2010, 261 (21.8/month) single family homes sold, indicating further 24

25 decline by 7.8%. From January to mid-april 2011, 67 (19.1/month) single family homes sold, indicating additional decline and a 45.7% overall decrease since This data indicates a continued situation of less demand and over supply, but prices appear to be leveling. In summary, the MMT statistics support what local Realtors and developers have been reporting in regards to a declining demand for residential homes, thus resulting in a similar decline in demand for residential land. We observe a situation of extreme oversupply and high levels of foreclosures occurring, which will eventually add additional supply to an already over supplied market. We are of the opinion that the demand levels within this general area are declining and there is uncertainty at this time, as the outlook of the market is not immediately predictable into the foreseeable future. Improvement of national economic conditions is also a likely prerequisite for full recovery of the local real estate market. 25

26 PROPERTY DESCRIPTION The subject contains 3 lots within Brookhollow subdivision. The location of these lots within the larger Brookhollow development may be seen in the previously presented aerial map. The size of each lot is 0.35 acres, with each lot being ±110 wide and ±140 deep. According to the previously presented Department of Agriculture Soil Survey data, the subject s lots are comprised primarily of well to somewhat excessively drained soils, which are conducive to most urban development. Observation of the improvements within the surrounding area and on adjacent lots indicate there is sufficient soil bearing capacity to support the improvements typically found in residential areas. Upon inspection, subject s lots all appear relatively level, and we see that the larger subdivision benefits from common storm water drainage system and retention areas. The lots are lightly wooded with some underbrush and other natural vegetation. The Federal Emergency Management Agency Flood Insurance Rate Map number 12033C0295G indicates the subject s lots are situated within the X flood zone, an area of minimum flooding. A copy of the applicable flood map was previously presented within the exhibits section of this report. All three lots are accessed via West Ten Mile Road, which is an asphalt-paved roadway, with a 66 -wide right-of-way. All necessary utilities are available to the subject lots, including public sewer service. Other amenities to the larger Brookhollow subdivision include asphalt-paved streets, concrete curb and gutter system, underground utilities, and common storm water retention area. In summary, the subject s 3 vacant residential lots are well suited for their intended residential use, and have been specifically constructed for such purpose. 26

27 HIGHEST AND BEST USE The highest and best use is defined as: "The reasonably probable and legal use of vacant land or an improved property that is physically possible, appropriately supported, financially feasible, and that results in the highest value." 2 In estimating the highest and best use of the subject property, the following four criteria were taken into consideration: 1) The uses legally permissible at the site 2) The uses physically possible on that site 3) Financially feasible uses of the site 1) The maximally productive use of the property AS VACANT Legally Permissible Uses: The subject s 3 lots are within the V-3, Village Single Family Residential High Density district and a mixed-use future land use district. According to the zoning code for the V-3 district, single-family dwelling structures are permitted to a density of five units per acre. Other permitted uses include the growing of vegetables or other food crops, public utilities, private marina, or family day care homes. Also, the subject lots are within the Brookhollow subdivision. We could not find any subdivision covenants and restrictions for this subdivision in the Escambia County Florida public records; therefore, we are unaware of any further legal restrictions on the subject property other than county zoning. Physically Possible Uses: As vacant, the subject s 3 lots have site areas with an average of ±15,400 SF (0.35 acres). Due to zoning setback restrictions and lot coverage ratios, only one single-family dwelling can be placed on each of the subject 2 The Appraisal of Real Estate, Thirteenth Edition (Chicago, IL: Appraisal Institute, 2008),

28 lots. They are well planned/configured within the larger Brookhollow development. The lots appear mostly level and wooded with some hardwoods and natural vegetation, and soils are assumed conducive for residential development. Based upon their layout, as well as the zoning restrictions placed upon them previously cited, we see no other physically possible use for the subject lots other than for residential development. Financially Feasible Uses: The subject lots are of a typical size and are in conformance with the general market. In addition, the Brookhollow subdivision is designed for development with moderate-priced housing. New single-family subdivisions within the general area have suspended development, with minimal improved sales and stalled construction within the past year. We observe much surplus and unsold inventory (including vacant and improved lots) in the surrounding market. As discussed, MMT statistics for the subject s surrounding neighborhood reveal that, prices have exhibited more stability in recent months, and absorption has gradually decreased leaving us with little reason to believe that the situation of oversupply will be alleviated in the near term. Therefore, considering the abundance of available lots and underdeveloped subdivisions in the area, and also the current flat to declining market conditions, we believe the only feasible use at this time would be to market the lots under the slow absorption presently evident or to hold the lots speculatively. Maximally Productive Use Based on the previous legally, physically and financially feasible analyses, we conclude that the highest and best use is to hold the lots speculatively for single- family development. 28

29 APPROACHES TO VALUE Our valuation will employ the Sales Comparison Approach to value. The Cost Approach is not applicable, as this is an appraisal analysis of vacant land. Because the subject is comprised of only three lots and we observe an absorption rate of more than four lots per quarter, we believe that the Income Approach is not applicable. Additionally, we have searched the market for smaller group lot purchases of up to four lots and have found no significant discount present in the current market for a group purchase of three lots. SALES COMPARISON APPROACH The Sales Comparison Approach relies upon the principle of substitution, which asserts that no person is justified in paying more for a property then the price of purchasing a similar property of equal utility on the open market. The Sales Comparison Approach is much like the approach taken by buyers who consider several offerings of properties before deciding to purchase a particular property. Under the sales comparison approach, the appraiser seeks out sales of comparable type properties, i.e., subdivision lots, which are compared to the developed lots of the subject property. In the case of the subject lots, an analysis of subdivisions proximate to the subject produced sufficient data for retail lot pricing. Our analysis of lots includes lot sales from similar developments similar within the general market area. With this in mind, we proceed with the valuation of the subject lots. On the following pages, we will analyze the most recent lot sales within these comparable subdivisions. 29

30 LOCATION MAP FOR SUBJECT AND COMPARABLES 30

31 Land Sale No. 1 Property Identification Record ID 4794 Property Type Vacant Residential lot Property Name Vacant Residential Lot Address 1639 Eagle Street, Cantonment, Escambia County, Florida Location Brookhollow SD Tax ID 211N Date Inspected 04/28/2011 Present Use Single Family Dwelling Sale Data Grantor Robert E. & Marilyn K. Davis Grantee A Needles Construction LLC Sale Date August 24, 2010 Deed Book/Page 6630, 688 Property Rights Fee Simple Conditions of Sale Arm's Length Financing Cash to seller Sale History None in previous three years Verification Other sources: Public records, MMT. Confirmed by David Singleton Sale Price $25,000 Land Data Zoning V-3, Village Single Family Residential Topography Level, cleared Utilities All available Dimensions 177 x x x 71 Shape Rectangular Rail Service None available Flood Info Zone "X", minimal probability Highest & Best Use Single Family Residential Encumbrances None adverse noted Land Size Information Gross Land Size Front Footage Acres or 16,988 SF 177 ft Eagle Street Indicators Sale Price/Gross Acre $64,103 Sale Price/Lot $25,000 Remarks This is the sale of a residential lot within the older Brookhollow subdivision, located along the north side of W. Ten Mile Road, east of Hwy 29 in Cantonment, FL. The site benefits from access to all public utilities; although, some older dwellings in the development were built before the availability of public sewer service and are on septic tanks. The site was purchased by a local homebuilder, who subsequently constructed a 1,700 SF, 3/2, brick house with a double garage. This dwelling sold for $159,000 on December 22,

32 AERIAL PHOTOGRAPH OF COMPARABLE 1 32

33 Land Sale No. 2 Property Identification Record ID 4796 Property Type Vacant Residential Property Name Vacant Residential Lot Address Ten Mile Road, Cantonment, Escambia County, Florida Location Between Cove Ave and Haley Lane, SS of W. Ten Mile Rd Tax ID 09-1S Date Inspected 04/28/2011 Present Use Vacant Site Sale Data Grantor Linda S. & Howard D. Smith Grantee Victor & Wanda Daigle Sale Date February 28, 2011 Deed Book/Page 6695, 32 Property Rights Fee Simple Conditions of Sale Arm's Length Financing Cash to seller Sale History None in previous three years Verification Other sources: public records, MMT, Confirmed by David Singleton Sale Price $22,000 Land Data Zoning R-3 Topography Level, some trees Utilities All available Dimensions 100 x x 100 x Shape Rectangular Flood Info Zone "X", minimal probability Highest & Best Use Residential Encumbrances None noted Land Size Information Gross Land Size Front Footage Acres or 21,780 SF 100 ft W. Ten Mile Road Indicators Sale Price/Gross Acre $44,000 Sale Price/Lot $22,000 Remarks This is the sale of a vacant parcel of land located along the south side of W. Ten Mile Road, west of Highway 29 in Cantonment, FL. This parcel was purchased by an adjacent land owner. The site was very shaded with several trees and light underbrush. All public utilities are available to this site along W. Ten Mile Road. 33

34 AERIAL PHOTOGRAPH OF COMPARABLE 2 34

35 Land Sale No. 3 Property Identification Record ID 4766 Property Name Vacant Residential Lot Address Wakefield Dr., Pensacola, Escambia County, Florida Location WS Wakefield Dr. S of E. Kingsfield Rd. Tax ID 18-1N Date Inspected April 4, 2011 Present Use Single Family Dwelling Sale Data Grantor Carissa L. Romero Grantee A. Needles Construction, LLC Sale Date August 18, 2010 Deed Book/Page Property Rights Fee Simple Marketing Time 146 Days Conditions of Sale Arm's Length Financing Cash to Seller Instrument General Warranty Deed Verification Stephen Shannon; , April 04, 2011; Other sources: MLS , Confirmed by Bruce A. Black Sale Price $22,000 DS $ Land Data Zoning Topography Utilities Dimensions Shape Flood Info Highest & Best Use Land Size Information Gross Land Size Front Footage V-1, Villages single family residential Mostly Level No Sewer 95.12' x ' x 95.11' x ' Rectangular Zone X, Minimal Flood Probability Present Use Acres or 13,768 SF 95 ft Total Frontage: 95 ft WS Wakefield Drive Indicators Sale Price/Gross Acre $69,605 Sale Price/Lot $22,000 Remarks This is a sale of a typical residential lot located within the Highland Downs subdivision off of East Kingsfield Road in Pensacola, FL. The lot has been developed since the sale with a single-family dwelling. 35

36 AERIAL PHOTOGRAPH OF COMPARABLE 3 36

37 Land Listing No. 4 Property Identification Record ID 4795 Property Type Vacant Residential Property Name Vacant Residential Lot Address 3318 Durney Drive, Cantonment, Escambia County, Florida Location Brookhollow Acres Tax ID 211N Date Inspected 04/28/2011 Present Use Vacant Site Sale Data Grantor Sonya Lisa Burrell Survey Date April 28, 2011 Property Rights Fee Simple Marketing Time 423 days Conditions of Sale Arm's length Financing All available Sale History None in previous three years Verification Art Gottily, Listing Agent; , May 02, 2011; Other sources: MLS384624, public records, Confirmed by David Singleton Listing Price $29,900 Land Data Zoning Topography Utilities Shape Flood Info Highest & Best Use Encumbrances Land Size Information Gross Land Size Front Footage V-3, Village Single Family Residential Some large oak trees, mostly level No public sewer Irregular Zone "X" Single family development None noted Acres or 25,700 SF 110 ft Durney Drive Indicators Sale Price/Gross Acre $50,678 Sale Price/Lot $29,900 Remarks This is the listing of a residential lot located in the older Brookhollow Acres subdivision, which contains only one street. There is no public sewer service available to this site. This is the vacant lot in this 16-lot subdivision. The listing agent reports some interest in the property. Listing History: Initially listed on 01/25/2010 for $38,000 and has steadily been reduced to its current asking price on 01/13/

38 AERIAL PHOTOGRAPH OF COMPARABLE 4 38

39 Land Sale No. 5 Property Identification Record ID 4558 Property Type Residential Lot, Vacant Residential Lot Property Name Vacant Residential Lot Address 1435 Keylan Cove, Pensacola, Escambia County, Florida Location Keylan Cove S/D Tax ID 101S Date Inspected 10/13/2010 Present Use Vacant Residential Sale Data Grantor Moore Homeworks Inc. Grantee Leonard B. Daniels Sale Date September 14, 2010 Deed Book/Page 6645,861 Property Rights Fee Simple Marketing Time 198 days Conditions of Sale Arm's Length Financing Cash to seller Sale History None in past three years Verification John Douglas, Listing Agent; , October 13, 2010; Other sources: MLS#384599, Public Records, Confirmed by David Singleton Sale Price $20,000 Land Data Zoning R-3 Topography Level, cleared, dry Utilities All public available Dimensions 39 X 124 Shape Rectangle Flood Info Zone X, minimal probability Highest & Best Use Single family development Encumbrances None noted Land Size Information Gross Land Size Front Footage Acres or 4,792 SF 3 ft Keylan Cove Indicators Sale Price/Gross Acre $181,818 Sale Price/Lot $20,000 Remarks This is the sale of vacant lot within the Keylan Cove subdivision, located off Bowman Road in Pensacola, Fl. This was a short sale; however, the listing agent believes that the selling price represented market value at the time of transfer. The bank paid approximately $1,000 in closing costs. The lot benefits from access to all public utilities. 39

40 AERIAL PHOTOGRAPH OF COMPARABLE 5 40

41 The above described comparables are organized in the following grid to facilitate comparison with the subject and to provide structure for our adjustment process. LOT COMPARABLE COMPARISON GRID ITEM SUBJECT COMPARABLE 1 COMPARABLE 2 COMPARABLE 3 COMPARABLE 4 COMPARABLE 5 Location Brookhollow Brookhollow Ten Mile Road Highland Downs Brookhollow Acres Keylan Cove Prox to Subj N/A Subject SD Across Street 2.75 Miles NE Adjacent SD 1.5 Miles SW Site Area (Ac) 0.35 Ac (Avg) Sales Price N/A $25,000 $22,000 $22,000 $29,900 $20,000 Prop Rights Fee Simple Similar Similar Similar Similar Similar Adjstd Price N/A $25,000 $22,000 $22,000 $29,900 $20,000 Financing Cash or Eqv Similar Similar Similar Similar Similar Adjstd Price N/A $25,000 $22,000 $22,000 $29,900 $20,000 Cond of Sale Arm's Length Similar Similar Similar Negotiations -20% Similar Adjstd Price N/A $25,000 $22,000 $22,000 $23,920 $20,000 Buyer Expend None Similar Similar Similar Similar Similar Adjstd Price N/A $25,000 $22,000 $22,000 $23,920 $20,000 Time/Mkt Con Apr-11 Aug-10 Feb-11 Aug-10 Current Sep-10 Adjstd Price N/A $25,000 $22,000 $22,000 $23,920 $20,000 Location Brookhollow Similar Similar Similar Similar Inferior 5% Site Area (Ac) 0.35 Ac (Avg) % Utilities All Available Similar Similar No Sewer 5% No Sewer 5% Similar Topography Typical Soils Similar Similar Similar Similar Similar Amenities U/G Utilities Same Similar Similar Similar Similar Net Phys Adj % N/A 0% 0% 5% 5% 25% Adjusted Value $25,000 $22,000 $23,100 $25,116 $25,000 Unit of Comparison - A unit of comparison is a component into which price is divided to facilitate comparison. Typical units of comparison employed by appraisers are price per SF, price per acre, price per front foot, price per SF of building area, price per room, etc. The function of the selected unit of comparison is to automatically adjust comparables for size. 41

42 In this appraisal, and in the preceding grid, we have used the unit of comparison of price per lot. We have chosen this unit of comparison because we believe this is the manner in which a typical buyer or seller would most likely frame an acquisition or disposition decision. Adjustments are then applied to the calculated unit of comparison to account for observed differences between the subject property and the comparables. In making adjustments, the appraiser has assumed the subject property to be the market standard. When the amenities of a particular comparable sale exceed those of the subject, the sale price of the comparable sale has been reduced or adjusted downward. When the reverse is true and the comparable sale is inferior to the subject, the sale price of the comparable sale is increased. Following is a brief explanation of adjustments applied in the comparison grid. Property Rights - To the best of the appraiser's knowledge, all of the comparable sales were of fee simple interest. Because the appraiser is estimating the value of the fee simple interest in the subject property, no adjustment is required for this element of comparison. Financing - The appraisal is made in terms of cash or terms generally equivalent thereto. All of the comparables represent either a "cash to seller" arrangement or financing at market terms. For this reason, no adjustment is necessary in this category of comparison. Conditions of Sale - To the best of the appraiser's knowledge, three of the sales were found to be "arms length" transactions without evidence of any undue influence or duress. For this reason, these comparables were sold under conditions of sale that are compatible with the market value definition and no adjustment is required. A negative adjustment is applied to the active listing to provide for a negotiation allowance in the estimation of anticipated price. Comparable 5 was a short sale; however, the sales 42

43 agent feels that the sale price was inline with market value considering the depressed residential market conditions in the area. Buyer Expenditures The comparables did not involve any extraordinary buyer expenditures for demolition, rezoning and/or environmental considerations, thus, no adjustments were necessary. Time/Market Conditions As the comparable sales occurred within the past eight months, no adjustments are required for differences in time/market conditions. Location/Appeal The subject lots are located within an area of medium density residential development. Four of the comparable sales are located in relative close proximity to the subject property and are considered similar with respect to appeal to the market. Comparable 5 is located in an area dominated by smaller, more moderately priced housing, thus, we apply a positive adjustment for this slightly inferior location. Site Area The subject lots contain, on average, ±0.35 acre and are being compared to properties varying in size from 0.11 to 0.59 acre. A positive adjustment is applied to comparable 5 to account for its considerably smaller size. No other adjustments are required. Utilities - All utilities are available to the subject and three of the comparables; therefore, no adjustments are necessary. Two comparable do not have access to public sanitary sewer, and we apply positive adjustments to account for this. Topography - The subject lots and each of the comparables have reasonably similar topography and typical soils with sufficient upland area to accommodate residential development; no adjustments are warranted. Project Amenities The subject development features underground utilities and asphalt roadways with concrete curbs and gutters typical of newer subdivisions within the area, which is similar to each of the comparable sales. 43

44 Additional Information We are aware of only one listing in the subject development, a one-acre, irregular-shaped lot listed for $39,500 (MLS#386518). This lot is densely wooded and sits behind several other lots in the Brookhollow development with little roadway frontage. This property has been listed at $39,500 since March 20, 2010 (403 days) with no offers for purchase and no price adjustments. We believe this listing to be grossly overpriced and do not consider it in our analysis. Summary and Reconciliation of Individual Lot Value - The comparable sales indicate an adjusted value range of from $22,000 to $25,116 per lot, with a mean of $24,043. All five comparables are good indicators of value for different elements of comparison. We place some weight on each of the comparables as we reconcile at a rounded $25,000 for the subject lots. Estimated Value per Lot = $25,000 In determining the value of the subject s three lots, we are of the opinion that the value of the subject s three lots is the sum of the retail values of the three lots with no discounting necessary. We have observed multiple group lot sales of up to four in the subject neighborhood without significant discounting. Additionally, we have conducted an absorption study utilizing data from some of the area s newest subdivisions located proximate to the subject development, and believe that an absorption rate of four lots or better per quarter can be expected. As the subject is only comprised of three lots, we believe that a discounted cash flow analysis to be irrelevant. Therefore, we conclude that the value of the subject s three lots at $25,000 per lot is $75,000. FINAL VALUE OPINION $75,000 SEVENTY-FIVE THOUSAND DOLLARS 44

45 ASSUMPTIONS AND LIMITING CONDITIONS 1. This is a Summary Appraisal Report which is intended to comply with the reporting requirements set forth under Standard Rule 2-2(b) of the Uniform Standards of Professional Appraisal Practice for a Summary Appraisal Report. 2. No responsibility is to be assumed for legal or title considerations. Title to the property is assumed to be good and marketable unless otherwise stated in this report. 3. The property is appraised free and clear of all liens and encumbrances unless otherwise stated in this report. 4. Responsible ownership and competent property management are assumed unless otherwise stated in this report. 5. The information furnished by others is believed to be reliable. However, no warranty is given for its accuracy. 6. All engineering is assumed to be correct. Any plot plans and illustrative material in this report are included only to assist the reader in visualizing the property. 7. It is assumed that there are no hidden or unapparent conditions of the property, subsoil, or structures that render it more or less valuable. No responsibility is assumed for such conditions or for arranging for engineering studies that may be required to discover them. 8. It is assumed that there is full compliance with all applicable federal, state, and local environmental regulations and laws unless otherwise stated in this report. 9. It is assumed that all applicable zoning and use regulations and restrictions have been complied with, unless a nonconformity has been stated, defined, and considered in this appraisal report. 10. It is assumed that all required licenses, certificates of occupancy or other legislative or administrative authority from any local, state, or national governmental or private entity or organization have been or can be obtained or renewed for any use on which the value estimates contained in this report are based. 11. Any sketch in this report may show approximate dimensions and is included to assist the reader in visualizing the property. Maps and exhibits found in this report are provided for reader reference purposes only. No guarantee as to accuracy is expressed or implied. 12. It is assumed that the utilization of the land and improvements is within the boundaries or property lines of the property descried and that there is no encroachment or trespass unless otherwise stated in this report. 45

46 ASSUMPTIONS AND LIMITING CONDITIONS CONT D. 13. The appraiser is not qualified to detect hazardous waste and/or toxic materials. Any comment by the appraiser that might suggest the possibility of the presence of such substances should not be taken as confirmation of the presence of hazardous waste and/or toxic materials. Such determination would require investigation by a qualified expert in the field of environmental assessment. The presence of substances such as asbestos, urea-formaldehyde foam insulation, or other potentially hazardous materials may affect the value of the property. The appraiser's value estimate is predicated on the assumption that there is no such material on or in the property that would cause a loss in value unless otherwise stated in this report. No responsibility is assumed for any environmental conditions, or for any expertise or engineering knowledge required to discover them. The appraiser's descriptions and resulting comments are the result of the routine observations made during the appraisal process. 14. Unless otherwise stated in this report, the subject property is appraised without a specific compliance survey having been conducted to determine if the property is or is not in conformance with the requirements of the Americans with Disabilities Act. The presence of architectural and communications barriers that are - structural in nature that would restrict access by disabled individuals may adversely affect the property's value, marketability, or utility. 15. Any proposed improvements are assumed to be completed in a good workmanlike manner in accordance with the submitted plans and specifications. 16. The distribution, if any, of the total valuation in this report between land and improvements applies only under the stated program of utilization. The separate allocations for land and buildings must not be used in conjunction with any other appraisal and are invalid if so used. 17. Possession of this report, or a copy thereof, does not carry with it the right of publication. It may not be used for any purpose by any person other than the party to whom it is addressed without the written consent of the appraiser, and in any event, only with proper written qualification and only in its entirety. 18. Neither all nor any part of the contents of this report (especially any conclusions as to value, the identity of the appraiser, or the firm with which the appraiser is connected) shall be disseminated to the public through advertising, public relations, news sales, or other media without prior written consent and approval of the appraiser. 46

47 CERTIFICATION We certify that, to the best of our knowledge and belief: 1. The statements contained in this appraisal report are true and correct. 2. The reported analyses, opinions, and conclusions are limited only by the reported assumptions and limiting conditions, and are our personal, impartial, and unbiased professional analyses, opinions, and conclusions. 3. We have no present or prospective interest in the property that is the subject of this report and we have no personal interest with respect to the parties involved. 4. We have no bias with respect to the property that is the subject of this report or to the parties involved with this assignment. 5. Our engagement in this assignment is not contingent upon developing or reporting predetermined results. 6. Our compensation for completing this assignment is not contingent upon the development or reporting of a predetermined value or direction in value that favors the cause of the client, the amount of the value opinion, the attainment of a stipulated result, or the occurrence of a subsequent event directly related to the intended use of this appraisal. 7. Our analyses, opinions, and conclusions were developed, and this report has been prepared in conformity with the Uniform Standards of Professional Appraisal Practice. 8. We have made a personal inspection for the property that is the subject of this report. 9. No one provided significant professional assistance to the persons signing this certification. 10. This appraisal was not based on a requested minimum valuation, a specific valuation, or the approval of a loan. 11. The reported analyses, opinions and conclusions were developed, and this report has been prepared, in conformity with the requirements of the Appraisal Institute s Code of Professional Ethics and Standards of Professional Appraisal Practice, which include the Uniform Standards of Professional Appraisal Practice. 12. The use of this report is subject to the requirements of the Appraisal Institute relating to review by its duly authorized representatives. 13. As of the date of this report, R. Shawn Brantley, MAI, has completed the continuing education program of the Appraisal Institute. 14. We certify that we have not appraised the subject property within the previous three years. R. Shawn Brantley, MAI, CCIM David C. Singleton State-Certified General Appraiser Registered Trainee Appraiser Florida # RZ289 Florida #RI

48 AFFILIATIONS/DESIGNATIONS: QUALIFICATIONS AS AN APPRAISER R. SHAWN BRANTLEY, MAI, CCIM, SRA MAI Designation: Commercial appraisal designation awarded in 1994, Member #10514 CCIM Designation: Commercial investment designation awarded in 1999, Member #8500 SRA designation: Residential appraisal designation awarded in Member #42488 State Certified in Florida (State-Certified General Appraiser, RZ289) and Alabama (State Certified General Real Property Appraiser, #G00419) to appraise all types of real property. FHA Appraiser: Member of Federal Housing Administration's Fee Appraisal Panel, VA Appraiser: Member of Veteran's Administration's Fee Appraisal Panel, Realtor: Member of Local Association, Florida Association, and National Association of Realtors. Professional Service: Past President of Appraisal Institute for 1997, Admissions Chair for Appraisal Institute in 1996, Have served extensively on Appraisal Institute s Regional Ethics & Counseling Panel, Have serve extensively on commercial (MAI) & residential (SRA) candidate experience review committees & professional standards committees for the Appraisal Institute. Past President of Board of Realtors in 1991, Have served on Realtor s board of directors for many years, Past chairman of Realtors grievance, professional standards, long-range planning & awards committees. EXPERIENCE: Over 20 Years of Experience: Owner/President of Brantley and Associates Real Estate Appraisal Corp. from 2004 to present. Owner/President of Martin, Brantley & Associates, Inc. from Owner/Vice President of Martin, Brantley & Associates, Inc. from Owner/President of Brantley Real Estate, Inc. from Employed as Staff Appraiser with Presley Real Estate, Inc. from Court Experience: Have testified in proceedings pertaining to values and damages on more than 100 occasions, including order of takings for eminent domain, jury trials, divorce cases, partition suits, bankruptcy matters, etc. Varied Experience: Experience includes appraisals in the following property types: Agricultural, Apartments, Automotive, Borrow Pits, Cemeteries, Churches, Commercial properties, Condemnation, Condominiums, Convenience stores, Cropland, Dental facilities, Distribution plants, Easements, Eminent domain matters, Extended stay motels, Farms, Fast food facilities, Freshwater marsh land, Golf courses, Greenhouses, Hair salons, Homes up to over 9,000SF, Hotels, Industrial properties, Land tracts up to 5,300 acres, Leasehold interests, Liquor stores, Motels, Medical facilities, Manufacturing plants, Night Clubs, Offices, Partial Interests, Restaurants, Retail, Right-of-way, Self-storage facilities, Service stations, Shopping centers, Subdivisions, Supermarkets, Timberland, Warehouses, Waterfront property, Wetlands, etc. Geography of Experience: Most extensive experience is within the Florida counties of Escambia, Santa Rosa, Okaloosa, Walton, & Bay, and the Alabama counties of Baldwin, Mobile, and Escambia. Other Experience: Employed by ETS (Educational Testing Service) as a test question writer & reviewer for Florida's examination for the state certification of real estate appraisers. Selected by the Florida Dept. of Revenue as participant in its bi-annual Florida Real Estate Value Survey. Selected by University of Florida, Institute of Food & Agricultural Sciences, as participant in its bi-annual survey of North Florida Land Values. 48

49 Partial List of Prior Clients: Attorneys: Roy V. Andrews, Stephen Baker, Bill Bond, Robert Beasely, T.A. Borowski, Ken Brooks, Paul Fitzgerald, Paul Green, Edward T. Hines, Patrick Jackson, T. Sol Johnson, T. A. Leonard, Jack Locklin, Jr., Laura Melvin, William Mitchell, John Myrick, Lawrence W. Oberhausen, Steve Shell, Jeffery Slingerland, Dan Stewart, Margarett Stopp, John Trawick, David White Banks: Bank of America, Bank of Pensacola, BB&T, Beach Community Bank, Hancock Bank, Peoples 1st, Compass Bank, 1st Nat'l Bank of Brewton, 1st Nat'l Bank & Trust of Crestview, 1st Nat'l Bank of Florida, Regions Bank, SunTrust, Vanguard Bank & Trust Company of Ft. Walton, Wachovia, Whitney Bank. Governmental Agencies & Political Subdivisions: City of Pensacola, City of Pensacola, City of Destin, City of Gulf Breeze, Escambia County, Florida Department of Environmental Protection, Florida Dept. of Transportation, Santa Rosa Bay Bridge Authority, Santa Rosa County, Santa Rosa County School Board, U.S. Army Corps of Engineers, U.S. Department of Housing & Urban Development, U.S. Department of Veterans Affairs. Corporate Clients: Associates Relocation, American Cyanamid, Baptist Hospital, Baskerville-Donovan, Inc., Blue Sky Timber, LLC, Chicago Title Insurance Co., Coldwell Banker Relocation, Education Credit Union, Elliot-Cooke & Co. CPA's, Equitable Relocation, Farm Credit, Figg Engineers, Inc., General Electric Corp., Gulf Power Co, International Paper Corporation, Medical Center Clinic, P.A., Monsanto Employees Credit Union, Moreland-Altobelli Assoc., Inc., Pace Water System, Inc., Sacred Heart Hospital, Saltmarsh, Cleveland & Gund, CPA s, Southern Farm Bureau Casualty Insurance Co, Teachers Federal Credit Union. EDUCATION: M.S. Real Estate, University of St. Thomas, B.S., Finance & Investment Management, University of Alabama, Over 1,000 classroom hours of specialized appraisal education specific to real estate appraisal: COURSE DESCRIPTION DATE COMPLETED HOURS SPONSOR Aviation Valuation 01/09 2 Pensacola Regional Airport USPAP Update and Core Law 04/08 7/3 Florida Department of Transportation Supervisor & Trainee Rules & Roles 04/08 3 Florida Department of Transportation Advanced Appraisal Review 04/08 17 Florida Department of Transportation Appraisal of Sovereign Submerged Lands 03/08 06 Dept. of Environmental Protection Valuation of Conservation Easements 01/08 31 Appraisal Institute Using the HP12C Calculator 11/06 07 Appraisal Institute Appraisal of Nursing Facilities 11/06 07 Appraisal Institute Analyzing Operating Expenses 11/06 07 Appraisal Institute Market & Feasibility Analysis 08/06 40 University of St. Thomas National USPAP 04/06 07 McKissock Florida Laws & Regulations 04/06 03 McKissock Advanced Appraisal Topics 01/06 40 University of St. Thomas Business Practices & Ethics 12/05 08 Appraisal Institute Statistical Analysis for Appraisal 08/05 40 University of St. Thomas USPAP 10/04 07 McKissock Legal Issues in Valuation 08/04 40 University of St. Thomas Effective Communication 08/04 40 University of St. Thomas Uniform Standards for Federal Land Acq. 03/04 16 Appraisal Institute Timberland Appraisal Methods 02/04 12 Appraisal Institute Florida State Law for Real Estate Appraisers 11/03 03 Appraisal Institute Effective Appraisal Writing 08/03 07 Appraisal Institute USPAP 11/02 04 Bert Rodgers Communicating the Appraisal 11/02 04 Bert Rodgers Neighborhood Analysis 11/02 04 Bert Rodgers Residential Subdivision Analysis 11/02 05 Bert Rodgers Sales Comparison Approach 11/02 06 Bert Rodgers 49

50 EDUCATION: Appraisal Research and Analysis 11/02 04 Bert Rodgers Urban Land Economics 08/01 26 Univ. of St. Thomas USPAP Update 06/01 07 S. Vehmeier Uniform Standards & Prof. App. Practices 11/00 10 McKissock Factory-Built Housing 11/00 10 McKissock Automated Valuation Models 11/00 10 McKissock USPAP Core Law 08/99 07 NWF Ch. Appraisal Inst. Comp. Commercial Review 06/99 20 CCIM Real Estate Decision Analysis 01/99 30 CCIM Real Estate Market Analysis 09/98 30 CCIM Real Estate Financial Analysis 03/98 30 CCIM Standard of Professional. Practice C 04/98 15 Appraisal Institute USPAP Core Law for Appraisers 10/97 07 Appraisal Institute Condemnation Valuation 05/97 04 EC Ch. Appraisal Inst. Tomorrows Appraiser 10/96 04 Appraisal Institute Standards of Prof. App. Prac. A Appraisal Institute Tools for Better Appraising NWF Ch. Appraisal Inst. Complex Residential Properties Mid-S Al C Appraising FHA Insured Prop Appraisal Institute Exp. Review Training Program NWF Ch. Appraisal Inst. Understanding Limited Appraisals Appraisal Institute Standards of Prof App Pract. B Appraisal Institute Standards of Prof App Pract. A Appraisal Institute USPAP Core Law Seminar NWF Ch. Appraisal Inst. Comp. Appraisal Workshop T. Whitmer Co USPAP/Environ. Hazards Real Estate Ed. Spec Litigation Valuation Appraisal Institute Adv. Income Capitalization Appraisal Institute State Cert. Real Est Appr Cs-II Bert Rodgers State Cert. Real Est Appr Cs-I Bert Rodgers Valuation & Report Writing AIREA/Univ. Florida Case Studies in RE Valuation AIREA/Univ. North Carolina Standards of Professional Prac AIREA/Texas Christian University Appl Residential Prop Valuation 1987 challenged SREA Capitalization Theory & Tech B 1987 challenged AIREA Capitalization Theory & Tech A 1986 challenged AIREA Basic Valuation Proc. (Exam 1A2) 1986 challenged AIREA Real Estate Appr Prin. (Exam1A-1) 1985 challenged AIREA Real Estate Brokers Course Bert Rodgers Principals of Real Estate (Fl431) University of Alabama Real Estate Finance (Fl 436) University of Alabama Real Estate Salesman's Course Bert Rodgers 50

51 QUALIFICATIONS AS AN APPRAISER DAVID C. SINGLETON EDUCATION: M.B.A., University of South Alabama, 2011 B.A., Communication & Business, University of South Alabama, 2006 Successful completion of the following courses and/or exams, which are specific to real estate appraisal: COURSE DESCRIPTION DATE HOURS SPONSOR General Appraiser Sales Comparison Approach Appraisal Institute 15-Hour National USPAP Course Appraisal Institute Mortgage Fraud Gold Coast Schools Introduction to Commercial Appraisal Gold Coast Schools Gen. Appraiser Market Anaylsis and Highest & Best Use Appraisal Institute General Appraiser Site Valuation and Cost Approach Appraisal Institute Real Estate Finance, Statistics and Valuation Modeling Appraisal Institute Roles/Rules of Supervisors/Trainees; Florida Law Gold Coast Schools USPAP Update McKissock Advanced Income Capitalization Appraisal Institute Basic Income Capitalization Appraisal Institute Business Practices and Ethics Appraisal Institute 15-Hour National USPAP Course Appraisal Institute Basic Appraisal Principles Appraisal Institute Basic Appraisal Procedures Appraisal Institute EXPERIENCE: Employed by Brantley & Associates Real Estate Appraisal Corp. as an Appraiser from 2009 to present. Employed by Appraisal Associates, as an Appraiser from 2007 to 2009 AFFILIATIONS: Trainee Real Property Appraiser, State of Alabama, #T01790 Registered Trainee Appraiser, State of Florida, #RI23431 Associate Member, Appraisal Institute SCOPE OF CLIENTS (Brantley & Associates): AmSouth Bank, Bank of America, Bank One, Bank of Pensacola, Bank of the South, Compass Bank, First American Bank of Pensacola, First National Bank of Florida, First Union Bank, Peoples First Community Bank, Nations Bank, Regions Bank, Southtrust Bank, SunTrust Bank, Whitney Bank, Vanguard Bank, Florida Department of Transportation, area attorneys, individuals, accountants and estates. 51

52 ADDENDA 52

53 GENERAL AREA ANALYSIS The Pensacola Metropolitan Statistical Area (MSA) consists of the two westernmost counties in Northwest Florida, Escambia and Santa Rosa. The MSA contains the cities of Pensacola, Milton and Gulf Breeze, and the towns of Century and Jay. The counties are situated along the Gulf of Mexico and the Intracoastal Waterway in the area dubbed as The Western Gate to the Sunshine State. The area is strategically placed between various large southern cities. It is located approximately 60 miles from Mobile, Alabama; 200 miles from New Orleans, Louisiana; 200 miles from Tallahassee, Florida; and 325 miles from Atlanta, Georgia. Escambia County has approximately 661 square miles with Santa Rosa County encompassing 1,024 square miles. There is an additional 100 square miles of water area within the county boundaries. A delineation of the boundaries is shown on the map below: 53

54 There are four forces that have significant influence on property values in the region. They are listed as follows: ECONOMIC FORCES SOCIAL FORCES GOVERNMENTAL FORCES ENVIRONMENTAL FORCES The interaction of these forces influences the value of real property in the market. The regional analysis is presented with these factors in mind. ECONOMIC FORCES: The analysis of economic trends will be confined to the local economy as most applicable to the subject of the appraisal. This category will evaluate trends in employment and housing trends within the MSA. Employment: Pensacola's regional economy continues to rely heavily upon governmental expenditures (primarily military); however, tourism, industry, health care and education make up the majority of its workforce and economy. At the present time, 36% of the work force is employed by the service industry, 16% by the retail trade industry, and 21% is employed by federal, state and local government. In an effort to diversify the past/existing labor trend, local government has intensified their efforts in securing new industry to the area. This effort commenced in the late 1980s and continues through the present time. Per the U.S. Bureau of Labor Statistics, the area s unemployment rate as of February 2010 was 11.5%, which ranks at 262 nd lowest unemployment in the U.S. of 372 tracked metropolitan areas. As stated, military personnel have had a profound effect upon the area's economy. Escambia and Santa Rosa Counties are host to numerous military installations including Naval Air Station Pensacola, Saufley Field, Corry Station and NAS Whiting Field. Known as the "Cradle of Naval Aviation", Naval Air Station Pensacola serves as the launching point for the flight training of every Naval Aviator, Naval Flight Officer (NFO), and enlisted aircrewman. In addition, approximately 32,000 aviation personnel in aeronautical technical phases of naval operations are trained here. The Pensacola Naval Complex in Escambia and Santa Rosa counties employs more than 16,000 military and 7,400 civilian support personnel. 3 The majority of Naval activities in the area are concentrated on the west side of the metropolitan area. The largest base is NAS Pensacola, which is located southwest of Pensacola s central business district at the entrance to Pensacola Bay. Additional military facilities include Eglin Air Force Base and Hurlburt Field. These facilities are located mostly in 3 NAS Pensacola, Commanding Officer, Naval Air Station Pensacola, (10/15/2007) 54

55 Okaloosa County but do provide economic impact to Santa Rosa County, and to a lesser extent, Escambia County. On August 27, 2005, the Defense Base Realignment and Closure Commission (BRAC) completed their final recommendations for base realignments and closures. Those recommendations affecting the Pensacola installations include the transfer of the Defense Finance and Accounting Services (400 jobs), the Officer Training Command (738 jobs), the Naval Aeromedical Research Laboratory (40 jobs), and Space and Naval Warfare Systems (139 jobs). This resulted in a loss of approximately 1,317 jobs; however, this loss was offset by BRAC s recommendation to transfer Randolf Air Force Base s undergraduate pilot and navigator training to NAS Pensacola. This transfer resulted in a gain of approximately 625 jobs, thus the net loss to NAS Pensacola was approximately 692 jobs. In summary, the current outlook for the future of NAS Pensacola looks positive. The 2005 BRAC recommendations also affected Eglin Air Force Base, resulting in a net gain of 2,200 jobs. Eglin is the largest Air Force base in the world. It covers three counties and over 724 square miles of land and 123,000 square miles into the Gulf of Mexico. More than 20,000 jobs and $1.4 billion are tied directly to activities at Eglin Air Force Base, Hurlburt Field and Duke Field. Other major employers in the region include: 55

56 These employers represent a broad base of industries. 56

57 A significant number of jobs in the service sector are provided by the health care industry. Pensacola is a regional center for medical care in Northwest Florida and South Alabama, offering specialized health care services for people in a wide multi-state area. The three regional hospitals include Baptist Hospital, Sacred Heart Hospital, and West Florida Hospital. The three centers have a total of 1,483 beds and feature a variety of medical specialties for the Southeast region. In addition to the three regional hospitals, other chief healthcare facilities within this MSA include Gulf Breeze Hospital (associated with Baptist Hospital), Naval Hospital, Santa Rosa Medical Center, and Nemours Children s Clinic. Two new major health care facilities were recently completed in the area, which are a state-of-the-art Veterans Affairs/Department of Defense Joint Ambulatory Care Clinic to be located near Corry Station and a world-class multimillion dollar orthopedics and sports medicine center, the Andrews Institute (featuring celebrated orthopedic surgeon James R. Andrews) in Gulf Breeze. Unemployment: As previously stated, the Northwest Florida region s unemployment rate for February 2010 was 11.5%. This unemployment is slightly higher than the national average of 10.4%. 57

58 Unemployment Rates in Santa Rosa Count over the past 20 years: Unemployment Rates in Escambia County over the past 20 years: The drastic rise in the unemployment rate over the past two years is attributed to the economic recession that started in Recently, in 2010 we have seen the economy on a rise and are slowly starting to come out of the recession. We can expect that the unemployment rate is about at its cap, and future trends should be for reductions in the unemployment rate. Housing: Both counties offer a wide variety of housing options ranging from affordable to luxury, waterfront, secluded or suburban residence. Growth within the housing market had been rapid in the past, and from 2004 to late 2005 it accelerated considerably due to housing shortages created by recent hurricanes. There was a great demand for residential property in the general market, and from 2004 through the third quarter of 2005, real estate values were rapidly increasing, and most land deals went down with multiple developers in the hunt. Conversely, in late 2005, the demand for residential homes (single-family homes, townhomes, condominiums, etc.) began to take a downward turn. This has been attributed to several factors. Initially, recent hurricanes, and the extensive damage they produced, caused construction costs and insurance premiums to rise exponentially. This also created in the 58

59 general public an awareness of the vulnerability of this hurricane prone area. Local Realtors subsequently began reporting a downward trend in residential sales. According to the Pensacola Association of Realtors Multiple Listing Service the average number of monthly sales drastically decreased over 32% from January 2007 to the first quarter of The average days listed on the market has increased from109 days to 124 days over this same time period. The number of listings in March 2010 was 3,791 single-family homes and 806 condominiums. Thus, the MLS statistics support what local Realtors and developers have been reporting in regards to a declining demand within the residential market, thus resulting in a similar decline in demand for residential land. In addition to the abundance of listings for residential housing and minimal sales, we also observe falling median prices. The affordable housing market has been more resistant to decline in both cost and absorption; however, other sectors of the residential market have shown declining prices, especially along the waterfront. According to the Haas Center, even with median home prices decreasing, many residents are feeling the pinch from increased property taxes in addition to already high insurance premiums. And although the housing affordability for Northwest Florida is improving with regard to lower interest rates and declining housing prices, the increases in insurance and property taxes coupled with minimal increases in median income will continue to make housing affordability a serious problem. Thus, we surmise that until the general area as a whole sees some kind of relief in regards to insurance costs and construction costs, and until the hurricane phobia subsides, demand for housing may remain somewhat stagnant into the foreseeable future. 4 SOCIAL FORCES: This category is primarily concerned with population characteristics and demographics. A study of an area's population characteristics produces much information about the basic demand for real estate in that market. Following is regional and city data pertinent to that topic. Population: Population growth in the Pensacola MSA (Escambia and Santa Rosa Counties) has continued at a steady pace since Population in the Pensacola MSA ( ) YEAR ESCAMBIA SANTA ROSA PENSACOLA MSA , , , , , , , , , , , , , , ,066 Population Increase Rates from : 4 Housing Affordability, A Quarterly Publication of the Haas Center for Business Research & Economic Development 4 Housing Affordability, A Quarterly Publication of the Haas Center for Business Research & Economic Development at the University of West Florida (Summer 2007). 59

60 Escambia Santa Rosa Pensacola MSA Percent Change from 2005 to % 1.49% 0.44% Percent Change from 2006 to % 1.36% 0.85% Percent Change from 2007 to % 2.62% 2.12% Percent Change from 2008 to % 0.93% 0.43% Percent Change from 2005 to % 6.54% 3.89% Population Trends in Santa Rosa County: Population Trends in Escambia County: 60

61 Basic demographic estimates for Santa Rosa and Escambia Counties for the year 2009: Santa Demographic Estimates Rosa Escambia US Income Per Capita Income $24,691 $23,347 $27,466 Median Family Income $62,522 $53,845 $63,211 Unemployed 10.9% 11.8% 10.2% Education High school graduate or higher 87.90% 86% 84.50% Bachelor's degree or higher 23.70% 23.50% 27.40% Occupied housing Units Owner-occupied housing units 79.80% 68.90% 67.10% Renter-occupied housing units 20.20% 31.10% 32.90% Vacant housing units 13.30% 16% 12% Median value of owner occupied homes $188,200 $145,700 $192,400 Age Median Age (in years) GOVERNMENTAL FORCES: This category addresses state and local government forces within the regional area. Type of Government: Santa Rosa and Escambia Counties are governed by a board of commissioners. Specified districts with some at large seats elect the commissioners. The board in turn appoints a county manager who oversees the day-to-day operations of the respective governments. Building Codes/Zoning: The various cities of Pensacola, Gulf Breeze and Milton and the Santa Rosa and Escambia County governments all operate separate planning and zoning departments. The various departments are responsible for establishing and enforcing land use regulations. These departments are extremely helpful in deciphering land use regulations. The City of Pensacola, Escambia County, the City of Milton, and Santa Rosa County also operate separate building inspection departments. This office is responsible for enforcing codes for building, electrical, mechanical, plumbing, and gas installations. The state of Florida has certain requirements before new development can take place. Under Florida s concurrency laws, an area must have adequate public facilities before new development may occur. All comprehensive plans across the state must include concurrency for roads, sanitary sewer, solid waste, drainage, potable water, parks and recreation, and mass transit, where applicable. 61

62 Law Enforcement/Fire Department: Escambia County and Santa Rosa County Sheriff Departments within the MSA and the respective City Police Departments provide adequate law enforcement within the immediate market area. Fire departments are staffed by volunteers in the County and paid employees in the City. Utilities: Northwest Florida is served with electrical power by Gulf Power Company, which owns three modern generating stations. The Bell South Telephone Company provides telephone service throughout the MSA. The Emerald Coast Utilities Authority supplies water and sanitary sewage disposal service to Escambia County. It also disposes of trash within the unincorporated area of the County with Sanitation Services of Pensacola having jurisdiction within the city limits. Natural gas is available for most areas by Energy Services of Pensacola. South Santa Rosa Utility supplies the city of Gulf Breeze with water and sewer service. Natural gas is also available in Gulf Breeze through the Gulf Breeze Natural Gas Department. The Public Works Department of Milton provides natural gas, sanitation, and water for the areas of Milton, East Milton, and Pace. Transportation: Federal Highway Interstate 10 runs through the MSA in its course from Los Angeles, California to Jacksonville, Florida. Additionally, the MSA is dissected by an ample variety of State, County and local roads, providing access throughout the area. The Pensacola Regional Airport is a commercial airport served by American Eagle, Continental Airlines, Delta Airlines, Northwest Airlink, and US Airways with an average total of 90 flights per day. The City of Pensacola operates the Port of Pensacola, which can accommodate ocean-going vessels with drafts up to 33 feet. Taxes: The State of Florida has no personal income tax. Additionally, there is no sales tax on food, medicine, packaging, boiler fuels or inventories. Sales taxes targeted toward tourism (retail sales, rentals, transient living accommodations) comprise 65% to 70% of Florida's tax revenue. There is a corporate state income tax of 5.5%. Ad valorem taxes are levied on property throughout the county to provide operating revenue to local government. Escambia County sales tax is at $0.075 on the dollar and Santa Rosa County is subject to $0.065 on the dollar. ENVIRONMENTAL FORCES: Environmental forces relate to the characteristics of a property's geographic location. Climate: The MSA is located in a generally warm climate, typical of the region along the upper Gulf Coast. The average temperature in January is 52 degrees and in July is 83 degrees. High winds, tropical storms or hurricanes have occurred in late summer and in early fall. Topography/Soil: The MSA is located on the Gulf Coastal Plain, which generally consists of level and flat land. The soils are mostly of the sandy loam nature and are generally well suited for buildings, roads and other common urban improvements. 62

63 Recreation: A wide variety of cultural activities such as music, art, theatrical productions and dance are located in the area. Canoeing, boating, fishing and other outdoor sporting activities are popular throughout the MSA. Several popular state and national parks are located in the MSA: Blackwater River State Park, Big Lagoon State Park, and the Gulf Islands National Seashore Park, which contains Fort Pickens. The MSA is also home to the Pensacola Pelicans who began their 10 th season in May 2010 as a minor league baseball team. The Pelicans currently play their games on Jim Spooner Field at the University of West Florida, but they will eventually move into the Vince Whibbs Community Maritime Park, once the bay-front stadium is completed downtown. Transportation: Escambia and Santa Rosa Counties are located along a sheltered 12 foot draft barge route which runs from Brownsville, Texas to Appalachicola, Florida. Amtrack and CSX Transportation provide rail service to and from Pensacola. Greyhound Lines, Inc. provides bus service to and from the Pensacola MSA. Regional Resources: Agriculture has continued to be a major contribution to the economy. It remains one of the prime resources of the area for row crop and tree farming. There are also extensive petroleum deposits offshore in the Gulf of Mexico. However, at the current time, only exploratory drilling has been permitted. The future impact of this resource is questionable as the prospect of full production drilling is vehemently opposed by environmentalists and local and state government. Perhaps one of the most recognized resources of the Pensacola MSA are the sparkling white sandy beaches, which extend from Mobile Bay to peninsular Florida. The beaches in the Pensacola area are a major tourist attraction. The skepticism of state officials on the issue of offshore drilling has recently been justified by BP s oil spill in the Gulf of Mexico. The crisis started when an offshore oil rig exploded and sank in the gulf on April 20, The incident ruptured the oil well and has caused a blowout, or an uncontrollable spill. The well has since spewed millions of gallons of crude oil into the Gulf of Mexico and continues to spew oil to this day (May 13, 2010). The environmental and economical repercussions of this spill could be catastrophic. The oil spill has imperiled the fishing industry and threatens marine life along the gulf coast. Dead dolphins, fish, birds, and turtles have already started to wash up on the beaches. The realization that the oil slick could make landfall in Pensacola has reminded residence of how important the beaches and waterways of the Pensacola MSA are to the economy. Hurricanes: As Florida endures the majority of Atlantic hurricane landfalls, with statistics identifying Pensacola as having a 1 in 8 chance of being the target, hurricane damage and their repercussions are major concerns for the Pensacola MSA. As described earlier in the Housing 63

64 section, Hurricane Ivan was the initial onset of the current market decline for the Pensacola MSA. The Atlantic hurricane season extends from June to November. Within the past twelve years the Pensacola MSA has encountered six damaging and even deadly hurricanes, among multiple tropical depressions, tropical storms, and minor hurricanes. Following is a table briefly describing each: MAJOR HURRICANES IN PENSACOLA MSA Name ERIN OPAL GEORGES IVAN DENNIS KATRINA Date August-95 October-95 September-98 September-04 July-05 August-05 Landfall Pensacola, FL Gulf Breeze, FL Biloxi, MS Gulf Shores, AL Pensacola, FL New Orleans, LA Category Winds 99 mph 116 mph 104 mph 120 mph 120 mph 175 mph Area Storm- Related Deaths None None None ,836 Total U.S. Loss $700 Million $5.2 Million $2.96 Billion $12 - $14 Billion $1.8 Billion $84 Billion These storms, along with several other Florida hurricanes, created in the general public an awareness of the vulnerability of this hurricane prone area. Due to these natural disasters frequently targeting the Escambia and Santa Rosa County areas, multiple hurricane shelters, evacuation planning guides and assistance programs have been formed to support local residents in preparing for and dealing the outcomes of these storms. There has been no detrimental hurricanes impact the area since Hurricane Katrina in August SUMMARY: The Pensacola MSA remains an evolving metropolitan area, traditionally dependent on tourism and an extensive military presence. The intensification of efforts to secure other industries shows the willingness of local government officials and community leaders to achieve a diversified economy. The MSA also has natural resources, affordable housing, and a growing, young workforce, all of which provide a good foundation for future growth. We conclude that the MSA is an economically viable environment with demand levels for affordable housing within this general area sufficient for an operative market, but clearly slower than we have historically seen. 64

65 SUBJECT PROPERTY DATA 65

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